Park City Group, Inc. (NASDAQ: PCYG), the parent company of ReposiTrak, Inc., which operates a B2B ecommerce, compliance, and supply chain platform that partners with retailers, wholesalers, and their suppliers, to accelerate sales, control risk, and improve supply chain efficiencies, announced financial results for the first fiscal quarter ended September 30, 2019.

First Quarter Financial and Recent Business Highlights:

  • Operating cash flow of $713,000. Cash totaled $18.3 million
  • Total revenue increased 3% sequentially and decreased 19% year-over-year due to lower non-recurring revenue
  • Recurring revenue increased 4% and reached 85% of total revenue
  • Operating expense declined 5% year-over-year
  • Net income of $178,000
  • Compliance facility connections reached 90,744, up 47% year-over-year
  • Total Tier 2 connections increased 184% year-over-year and up 48% sequentially
  • MarketPlace added two net new buyers
  • Repurchased 79,955 shares at an average price of $6.47 for a total of nearly $518,000

“The goal of driving our network size from 20,000-plus to 100,000 companies is accelerating,” said Randall K. Fields, Chairman and CEO of Park City Group. “We ended the quarter with a total network of nearly 340,000 connections. Increasing the penetration in our network represents an eight-figure revenue opportunity. Driving the network scale, making it easier for customers to buy, provides cross selling opportunities for more services, at a competitive price, and drives results.”

“We remain focused on accelerating our recurring revenue growth with a three-pronged strategy,” Mr. Fields stated. “First, we grow compliance revenue by adding more Tier 2 hubs. Second, we accelerate Supply Chain revenue by focusing on the industry’s number one problem: Out of Stocks. Third, we grow MarketPlace by adding additional buyers. All of this is happening now, and we believe that it will drive year-over-year revenue growth for fiscal 2020.”

“Our platform continues to attract net new participants every month,” Mr. Fields added. “We remain laser-focused on growing recurring revenue and further penetrating our existing customer base. Notably, Tier 2 recurring revenue grew for the quarter 8% year-over-year, and we exited the quarter on a run rate that was 35% higher than the comparable period last year.”

Mr. Fields concluded, “I am particularly encouraged with the response to our new Out of Stock Management Solution (OOS). We delivered an average reduction of 39% in out-of-stocks in less than three months for nine different retailers across more than 25,000 store-SKUs and more than 12,175 stores. Eliminating out-of-stocks remains a critical challenge for food retailers as consumers turn to online retailers when their local store is out of a sought-after item. Previously, retailers had no viable solution to address this challenge. Our OOS is the industry’s first solution to address Direct Store Delivery out-of-stocks, enables retailers to keep customers and increase revenues. It also serves as a differentiator, helping us secure recurring revenue. When combined with our MarketPlace solution, we are increasingly providing innovative solutions to address pressing challenges for all retailers. The growth of our network underscores the progress we are making as we continue to minimize one-time revenue, and focus on our accelerating recurring revenue. As we accomplish this objective, our top line will begin to grow rapidly.”

First Quarter Financial Results:

First Fiscal Quarter 2020 Results (three months ended September 30, 2019 vs. three months ended September 30, 2018):

Total revenue declined 19% to $4.8 million as compared to $5.9 due to lower non-recurring revenue in the current period. Total operating expense was $4.7 million, a 5% decrease from $4.9 million. GAAP net income was $178,000, or 4% of revenue, versus $966,000, or 16% of revenue, and GAAP net income to common shareholders was $32,000, or $0.00 per diluted share, compared to $820,000, or $0.04 per diluted share.

Conference Call:

The Company will host a conference call at 4:15 p.m. ET today, November 7, 2019 to discuss the Company's results. Investors and interested parties may participate in the call by dialing 1-866-952-8559 (toll-free) or 1-785-424-1877 (international) and referring Conference ID: PARKCITY. The conference call is also being webcast and is available via the investor relations section of the Company's website, www.parkcitygroup.com. A replay of the conference call will be available from 7:15 ET today until 11:59 p.m. ET on December 7, 2019. The Replay can be accessed by calling 1-844-512-2921 (toll-free) or 1-412-317-6671 (international). Please enter pin number 136961to access the replay.

About Park City Group:

Park City Group, Inc. (NASDAQ: PCYG), the parent company of ReposiTrak, Inc., a compliance, supply chain, and e-commerce platform that enables retailers, wholesalers, and their suppliers, to accelerate sales, control risk, and improve supply chain efficiencies. More information is available at www.parkcitygroup.com and www.repositrak.com.

Specific disclosure relating to Park City Group, including management's analysis of results from operations and financial condition, are contained in the Company's annual report on Form 10-K for the fiscal year ended September 30, 2019 and other reports filed with the Securities and Exchange Commission. Investors are encouraged to read and consider such disclosure and analysis contained in the Company's Form 10-K and other reports, including the risk factors contained in the Form 10-K.

Forward-Looking Statement

Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,” “predict,” “if”, “should” and “will” and similar expressions as they relate to Park City Group, Inc. (“Park City Group”) are intended to identify such forward-looking statements. Park City Group may from time to time update these publicly announced projections, but it is not obligated to do so. Any projections of future results of operations should not be construed in any manner as a guarantee that such results will in fact occur. These projections are subject to change and could differ materially from final reported results. For a discussion of such risks and uncertainties, see “Risk Factors” in Park City’s annual report on Form 10-K, its quarterly report on Form 10-Q, and its other reports filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made.

PARK CITY GROUP, INC.

Consolidated Condensed Statements of Operations (Unaudited)

 
         Three Months Ended
FY ENDS June    

9/30/19

 

9/30/18

  

% Chg.

                   
Total Revenues    

 $     4,800,084

 

 $     5,941,994

  

(19%)

                 

 

Operating Expenses            

 

  Cost of Services and Product Support    

      (1,828,114)

 

      (1,728,526)

 

6%

  Sales and Marketing    

      (1,414,863)

 

      (1,908,024)

 

(26%)

  General and Administrative    

      (1,222,212)

 

      (1,143,311)

 

7%

  Depreciation and Amortization    

         (193,677)

 

         (145,375)

 

33%

  Total Operating Expenses    

      (4,658,866)

 

      (4,925,236)

 

(5%)

                 

 

Operating Income    

 $        141,218

 

 $     1,016,758

  

(86%)

                 

 

  Interest Income    

             82,731

 

             35,124

 

136%

  Interest (Expense)    

           (20,598)

 

           (10,473)

 

97%

  Gain (loss) Investment    

                     -  

 

                     -  

 

 

  Income Before Taxes    

           203,351

 

        1,041,409

 

(80%)

                 

 

  Provision for Taxes    

           (25,000)

 

           (75,000)

 

(67%)

Net Income    

 $        178,351

 

 $        966,409

  

(82%)

                 

 

  Dividends on Preferred Stock    

         (146,611)

 

         (146,611)

 

                       -

Net Income to Common Shareholders    

 $          31,740

 

 $        819,798

 

(96%)

                 

 

GAAP EPS, Basic  

 $              0.00

 

 $              0.04

 

(96%)

GAAP EPS, Diluted  

 $              0.00

 

 $              0.04

 

(96%)

                   
Weighted Average Shares, Basic    

19,811,000

 

19,786,000

   
Weighted Average Shares, Diluted    

20,122,000

 

20,363,000

   

PARK CITY GROUP, INC.

Consolidated Condensed Balance Sheets (Unaudited)

 

Assets

 

September
30,

2019

 

 

June 30,

2019

 

Current assets

 

 

 

 

 

 

Cash

 

$

18,295,443

 

 

$

18,609,423

 

Receivables, net of allowance for doubtful accounts of $272,345 and $145,825 at September
30, 2019 and June 30, 2019, respectively

 

 

4,073,777

 

 

 

3,878,658

 

Contract asset – unbilled current portion

 

 

3,024,821

 

 

 

3,023,694

 

Prepaid expense and other current assets

 

 

472,068

 

 

 

1,037,099

 

 

 

 

 

 

 

 

 

 

Total current assets

 

 

25,866,109

 

 

 

26,548,874

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

3,189,651

 

 

 

2,972,257

 

 

 

 

 

 

 

 

 

 

Other assets:

 

 

 

 

 

 

 

 

Deposits, and other assets

 

 

22,414

 

 

 

17,146

 

Contract asset – unbilled long-term portion

 

 

1,488,310

 

 

 

1,659,110

 

Operating lease-right-of-use asset

 

 

842,689

 

 

 

-

 

Customer relationships

 

 

755,550

 

 

 

788,400

 

Goodwill

 

 

20,883,886

 

 

 

20,883,886

 

Capitalized software costs, net

 

 

46,349

 

 

 

70,864

 

 

 

 

 

 

 

 

 

 

Total other assets

 

 

24,039,198

 

 

 

23,419,406

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$

53,094,958

 

 

$

52,940,537

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

441,096

 

 

$

530,294

 

Accrued liabilities

 

 

1,179,289

 

 

 

1,399,368

 

Contract liability - deferred revenue

 

 

1,955,425

 

 

 

1,917,787

 

Lines of credit

 

 

4,660,000

 

 

 

4,660,000

 

Operating lease liability - current

 

 

82,517

 

 

 

-

 

Current portion of notes payable

 

 

298,866

 

 

 

295,168

 

 

 

 

 

 

 

 

 

 

Total current liabilities

 

 

8,617,193

 

 

 

8,802,617

 

 

 

 

 

 

 

 

 

 

Long-term liabilities

 

 

 

 

 

 

 

 

Operating lease liability – less current portion

 

 

760,172

 

 

-

 

Notes payable, less current portion

 

 

844,636

 

 

 

920,754

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

10,222,001

 

 

 

9,723,371

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred Stock; $0.01 par value, 30,000,000 shares authorized;

 

 

 

 

 

 

 

 

Series B Preferred, 700,000 shares authorized; 625,375 shares issued and outstanding at
September 30, 2019 and June 30, 2019;

 

 

6,254

 

 

 

6,254

 

Series B-1 Preferred, 550,000 shares authorized; 212,402 shares issued and outstanding at
September 30, 2019 and June 30, 2019, respectively

 

 

2,124

 

 

 

2,124

 

Common Stock, $0.01 par value, 50,000,000 shares authorized; 19,741,234 and 19,793,372
issued and outstanding at September 30, 2019 and June 30, 2019, respectively

 

 

197,415

 

 

 

197,936

 

Additional paid-in capital

 

 

76,533,138

 

 

 

76,908,566

 

Accumulated deficit

 

 

(33,865,974

)

 

 

(33,897,714

)

 

 

 

 

 

 

 

 

 

Total stockholders’ equity

 

 

42,872,957

 

 

 

43,217,166

 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

53,094,958

 

 

$

52,940,537

 

PARK CITY GROUP, INC.

Consolidated Condensed Statements of Cash Flows (Unaudited)

 

 

 

Three Months Ended

September 30,

 

 

 

2019

 

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

178,351

 

 

$

966,409

 

Adjustments to reconcile net income to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

193,677

 

 

 

145,376

 

Stock compensation expense

 

 

119,567

 

 

 

95,688

 

Bad debt expense

 

 

125,000

 

 

 

100,000

 

(Increase) decrease in:

 

 

 

 

 

 

 

 

Accounts receivables

 

 

(321,246

)

 

 

1,730,526

 

Long-term receivables, prepaid and other assets

 

 

730,563

 

 

 

(1,326,272

)

Right-of-use asset

 

 

(842,689

)

 

 

-

 

(Decrease) increase in:

 

 

 

 

 

 

 

 

Accounts payable

 

 

(89,198

)

 

 

(550,914

)

Accrued liabilities

 

 

(261,758

)

 

 

666,002

 

Lease liabilities

 

 

842,689

 

 

 

-

 

Deferred revenue

 

 

37,638

 

 

 

(220,023

)

Net cash provided by operating activities

 

 

712,594

 

 

 

1,606,792

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(353,706

)

 

 

(1,492

)

Net cash used in investing activities

 

 

(353,706

)

 

 

(1,492

)

 

 

 

 

 

 

 

 

 

Cash flows financing activities:

 

 

 

 

 

 

 

 

Net increase in lines of credit

 

 

-

 

 

 

1,430,000

 

Common Stock buyback/retirement

 

 

(517,360

)

 

 

-

 

Proceeds from employee stock plans

 

 

63,523

 

 

 

-

 

Dividends paid

 

 

(146,611

)

 

 

-

 

Payments on notes payable and capital leases

 

 

(72,420

)

 

 

(1,476,543

)

Net cash used in financing activities

 

 

(672,868

)

 

 

(46,543

)

 

 

 

 

 

 

 

 

 

Net (decrease) increase in cash and cash equivalents

 

 

(313,980

)

 

 

1,558,757

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

 

18,609,423

 

 

 

14,892,439

 

Cash and cash equivalents at end of period

 

$

18,295,443

 

 

$

16,451,196

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

Cash paid for income taxes

 

$

79,073

 

 

$

98,039

 

Cash paid for interest

 

$

20,598

 

 

$

8,274

 

Cash paid for operating leases

 

$

30,600

 

 

$

-

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Common Stock to pay accrued liabilities

 

$

77,888

 

 

$

134,546

 

Dividends accrued on preferred stock

 

$

146,611

 

 

$

146,611